Failure usually comes from context
Indicators do not fail only because they are flawed. They also fail because markets can enter conditions that are far outside the assumptions those indicators were built on.
Common failure zones
- Macro shock events
- Forced deleveraging
- Liquidity air pockets
- Narrative rotation with extreme crowding
Better response
When signals stop behaving normally, the answer is rarely to ignore them forever. The better move is to reduce confidence, widen the interpretation lens, and rely more heavily on risk control until the market normalizes.
Bottom line
Indicators are tools, not guarantees. Their value depends on the market backdrop they are operating in.